Most Depop tax guides mention deductions in a single paragraph before moving on to forms and filing deadlines. That's backwards for a lot of sellers — under-claiming legitimate expenses, not over-claiming them, is the more common and more expensive mistake. Here's a fuller breakdown of what actually reduces taxable profit.
The baseline: it's profit that's taxed, not gross sales
As covered in the broader filing guide, tax is owed on profit after expenses, not on the total a 1099-K reports. Every category below is part of getting that profit number accurate instead of overpaying tax on revenue that never actually stayed in the business.
Cost of goods sold — the big one
Whatever you paid to source an item — thrift store price, wholesale lot cost, estate sale haul — is deductible against the price it eventually sells for. This is the single largest deduction most resellers have, and it's also the one most likely to be under-documented if receipts aren't kept at the time of purchase rather than reconstructed later.
Platform and transaction fees
Depop's selling fees, payment processing fees, and any promoted-listing spend are all deductible business expenses. The exact fee breakdown matters here because these fees come out automatically before a payout ever lands — it's easy to forget they're a deductible cost precisely because they're never seen sitting in a bank account in the first place.
Shipping and packaging supplies
Postage, mailers, poly bags, tissue paper, tape, and any packaging bought specifically for shipping sold items are deductible — including packaging bought in bulk, even if some of it carries over into a future tax year.
Photography and listing equipment
A ring light, a backdrop, a phone tripod, or even a portion of a phone's cost if it's used substantially for the business can be deducted, typically depreciated or expensed depending on cost and how the equipment is used.
Software and tools, automation included
Subscriptions to listing, scheduling, or automation tools — DepopAutomation.com included — are ordinary and necessary business expenses for a resale operation and are deductible the same way any other software subscription would be for a small business.
Home office and storage space
A portion of rent or mortgage, utilities, and a storage unit used regularly and exclusively for inventory or shop operations can be deducted using a home-office calculation — this is one of the most commonly missed deductions because it doesn't feel like a "business" expense the way a shipping label does.
Mileage for sourcing trips
Driving to thrift stores, estate sales, or the post office for business purposes is deductible mileage, tracked either by actual expenses or the standard mileage rate — but only if the trips and distances are actually logged, not estimated after the fact.
Why documentation is the real bottleneck
None of these deductions matter if the records don't hold up — a receipt-less claim is a claim an accountant (or an audit) can't verify. DepopAutomation.com's profit tracker logs cost basis against every item at listing time and matches it to the eventual sale, fees, and shipping automatically, turning "what did I actually spend" from a April reconstruction project into a running, categorized record all year.
Conclusion
Cost of goods, platform fees, shipping supplies, equipment, software, home office space, and sourcing mileage are all legitimate deductions most sellers under-claim simply because the receipts weren't logged at the time. Build the record automatically as you list with DepopAutomation.com.